Remarks As Prepared For Delivery

U.S. Deputy Commerce Secretary Bruce Andrews

Thank you, Eric. Good afternoon. It's great to be here. I would like to join Eric in welcoming all of you today.

I also want to thank the entire team at the Bureau of Industry and Security (BIS) for organizing this Update Conference. It has become a must-attend event for many in our exporting community. And the reason is simple: as Secretary Pritzker said, export control reform is essential to our national security, which includes our economic security.

To be honest, when I first joined the Department of Commerce as the Secretary's Chief of Staff, I did not have a full appreciation for the importance of BIS and its work. That changed quickly.

Around the time I started, I traveled to my home town of Syracuse to speak at an event organized by the International Trade Administration. During a roundtable with roughly 25 business leaders, I was surprised to hear them repeatedly raise the issue of the export control system.

This sentiment – this focus on export controls – was almost unanimous around the table; it was a real moment of epiphany for me. I never would have expected so many companies to raise this as one of their top issues.

From that experience, it became clear why, shortly after taking office, President Obama ordered a broad-based review of our export control system—a system that too often reflected assumptions of the Cold War era. We needed a system that addressed contemporary threats and realities. We needed a system that was more reliable and predictable so that U.S. exporters could be more reliable and predictable suppliers. We needed a system that was nuanced so that less sensitive items destined to countries and end uses of less concern could be controlled more flexibly. The Commerce Department system and regulations are designed to address all these concerns, which is why we have taken on the burden of implementing many of the reforms.

To the get to the point where we are today, a massive amount of work was needed over the course of the last five years. The Departments of Defense, State, and Commerce, supported by multiple other agencies and laboratories, reviewed every control for every military and space-related item. They had the difficult job of identifying which were the items that continued to warrant the worldwide controls of the ITAR and which were the military and space items that would still require control, but could be exported more flexibly to close allies. This was a massive exercise. And every one of the proposed changes went through multiple rounds of industry and public comment and congressional notification.

Assembling, devising, and executing this strategy has been considered one of the most difficult jobs in government. But the truth is, government can't do this job alone, which is why, at this conference and year-round, we seek out and appreciate the cooperation and participation of all of you – our nation's exporting community.

Now that the regulations are starting to come on line and grand policy plans are being put to the test in actual implementation, we need to hear from you whether they work and whether we are accomplishing the national security objectives that then-Secretary of Defense Gates set out in 2010.

Are the reforms allowing for greater interoperability with our close allies? Are the reforms reducing the incentive for foreign companies to design out or avoid U.S.-origin content or services? Are the reforms allowing the government to focus its resources on transactions of greater concern? We are looking to you to let us know whether we are failing or succeeding in each of these objectives.

Based on a review of the data since the first set of rules became effective last October, the new system seems to be working as intended. Exports of parts and components in the supply chain to our close allies are occurring more quickly and efficiently. Non-U.S. companies are more willing to buy items from U.S. companies without fear of an "ITAR taint" to what they build. The ability of companies in allied countries to engage in joint production and development projects is becoming easier. Once companies get comfortable with the new system, the paperwork and licensing burden is being reduced. Companies are able to determine more clearly when items are and are not ITAR controlled. The Administration is becoming able to spend more time investigating exports and reexports to destinations and end uses of more concern.

All told, here's the bottom line: export control reform maintains effective safeguards, brings transparency to our system, and ensures efficiency in a field of regulation that has long lacked it.

And for those aspects that are not yet as efficient as they could or should be, the heart of the reform effort includes a spirit of transparency and regular interaction with industry and national security stakeholders to continually improve and streamline the system.

As we work to make our reform initiative a source of even greater strength for the security of our country and the competitiveness of key industries, BIS and the Department of Commerce are here to help.

BIS provides a wide range of services to ensure companies can navigate the export control process easily and efficiently. Among these are: counselling; training seminars; Web-based interactive tools; compliance assistance; and, technical support to register and use the simplified network application process.

BIS has held more than 200 outreach activities to educate companies on the nuances of export control reform. Tomorrow, for example, the Bureau is hosting a large number of subject matter expert roundtables, including representatives from the Small Business Administration and Commerce's Minority Business Development Agency. I encourage you all to attend.

We know that you are investing substantial resources to make export control reform work. Many of you have reclassified thousands of parts, revised your IT control systems, and conducted thousands of hours of training for your compliance, operations, and technical teams.

We recognize that, for some, this process has resulted in a significant increase in your workload. But we firmly believe that your tactical investment will reap strategic rewards over time.

In government, we are few in number and we rely on you, the private sector, to help educate your suppliers, employees, and customers. The effort and resources you devote to this exercise are crucial to the success of our reform efforts and indeed, of the export control system generally.

At Commerce, we are committed to working side-by-side with you to educate stakeholders, keep our supplier base informed, and reach out to customers at home and abroad.

Our task is not easy. Changing mindsets is always a seemingly impossible challenge. But you have demonstrated, time and again, your capacity to reinvent yourselves, to develop new products, to market ideas and items and innovations that place all of you at the forefront of the 21st century global economy.

With your ongoing commitment, with the expertise of the businesses in this room and the know-how of our teams at BIS and the Department of Commerce, we will achieve President Obama's goal: to make America safer, to give an edge to American industry, to keep American workers strong, competitive, and prosperous.